US against local content requirements in renewables

Priya sundarajan | | Updated on: Nov 09, 2011
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The US government has expressed its reservations over local content requirements in clean energy projects.

“We must fight the urge to link our promotion of clean energy to policies that protect local industries with unfair trade practices, Mr Francisco J Sanchez, Under Secretary for Commerce for International Trade, US Department of Commerce.

Speaking at Solarcon India 2011, an annual international conference of the solar power industry, Mr Sanchez observed that local content requirements keep cutting edge technology out of the hands of project developers, limiting the deployment. Ultimately, they force consumers to pay more for less.”

When countries create unnecessary trade barriers, they may benefit in the short-term, but their consumers are eventually deprived of the world's most cutting-edge technology, Mr Sanchez said.

He added that when countries open their market to foreign goods, competition increases for everyone, driving innovation, reducing costs and attracting manufacturers whose supply chain creates thousands of jobs.

It is pertinent to note that the guidelines for the ‘Batch II bidding' under the National Solar Mission, requires photo voltaic cells to be produced in India.

Local content stipulation

This local content stipulation has turned out to be a sore point with many who have large manufacturing capacities elsewhere. For instance, REC Solar, an American company, has a plant in Singapore that can produce 800 megawatt (MW) worth of PV panels a year. The company's General Manager for Asia Pacific, Mr Matt Daly, says that it is difficult for the company to get advantages of scale, if it were forced to set up a manufacturing facility in India. Supplying from Singapore would be cheaper, he told journalists here.

Asked if the US moves towards bringing in anti-dumping levies on Chinese suppliers of PV modules did not constitute favouring ‘local content', Mr Sanchez said that the US market was the most open market in the world. “As long as everybody plays by the rule, we have no problems. But when they don't, we will enforce our trade laws,” he said.

Mr Sanchez is leading a delegation of leading US clean energy companies. While in New Delhi on Tuesday, Mr Sanchez met with the Indian Commerce Secretary, Dr Rahul Khullar. In his speech at Solarcon, he observed that the National Solar Mission had created a $19 billion plan that was an opportunity for US companies to have a play in.

First Solar, a leading US supplier of PV modules based on thin-film technology, which is active in the Indian market and has announced orders worth 200 MW from Indian companies, is looking for more business.

The company's President, Mr James Brown, said that the solar industry was “in a bit of a turmoil”. In an obvious reference to the Chinese, he said that some players, “desperate to find a market for their products”, were bringing down prices aggressively.

“I recommend you to be strategically opportunistic” and to “choose partners for the long term.”

Published on November 09, 2011

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